One of the 2 rumors that leaked last night has now been confirmed. Len Riggio, the CEO of B&N, has just filed SEC paperwork that informs the regulatory agency that he wants to buy Barnes & Noble’s 689 retail stores as well as the online retail site BN.com.
The company has confirmed the news in a press release. The offer would spin off the Nook Media into a separate company under the current corporate leadership (FSM help them). B&N College currently operates 674 bookstores.
The offer comes only a few days before B&N is set to release their quarterly earnings earnings on Thursday, February 28, and follows warnings that B&N expects to report bad news.
BTW, the SEC paperwork revealed a second interesting detail. Riggio doesn’t control 30% of B&N, like everyone believed; he now controls 37%. He also owns a holding company that controls another 8% of the company, and his greater concentration of shares means that if this becomes a stockholder fight then he only needs to gain the support of 3 or 4 major stockholders.
Considering Riggio used to own B&N College outright before selling the business back to B&N, I have to wonder why he sold it and why he doesn’t want it back. This point is off topic, but I suspect Riggio thinks the business of running college bookstores doesn’t have much of a future (possibly due to the textbook price bubble).
Interesting move, is it not? I think Riggio is trying to get rid of the parts of B&N that he sees as having no future (or at least being less viable), but it’s not clear why the retail stores are being spun off shortly after the retail division head announced plans to close 20 stores a year for the next 10 years.
But more importantly, Riggio doesn’t see that that Nook Media has much of a future – from the viewpoint of a guy who built a retail chain, anyway. Considering that he famously doesn’t even use his own hardware, Nook Media is probably better off without him.
Then again, a simple binary split like this is probably a suboptimal option. B&N would probably be worth more if split in 3. B&N College could go to one of the other companies that run college bookstores (Follett, for example, has 900 stores in US and CAN). Then Nook Media could be sold off to a gadget company: MS, Google, Rakuten, anyone.
Combining Nook and B&N College as a rump of a company is probably going to doom both parts.